Health & Beauty

Driven by multiple forces such as policies and capital, my country's biomedicine has entered a stage of rapid development, and many places have regard this industry as a new economic growth point, and continue to increase their layout. In the context of increasing support for pharmaceutical innovation at the policy level, the capital market for innovative medicines is not diminishing, and listed pharmaceutical companies have recently rushed to introduce new medicines to enhance their innovation capabilities. The industry believes that the introduction of a new drug model can quickly expand the product pipeline, but only companies with continuous R&D capabilities and true innovation capabilities will be recognized by the capital market.

Clarify the development goals of the biopharmaceutical industry in many places

Since September, many provinces and cities have successively proposed development goals for the biomedical industry in the next few years.

The biomedical industry is an important pillar of Shanghai's strategic emerging industries. Statistics show that the scale of Shanghai's biopharmaceutical industry will exceed 600 billion yuan in 2020, a record high. In the first half of this year, the scale of the industry has exceeded 350 billion yuan, an increase of 22.8%. At a press conference held by the Shanghai Municipal Government on September 26, Wu Jincheng, director of the Shanghai Municipal Commission of Economy and Information Technology, stated that Shanghai is currently based on the development of the biomedical industry and is accelerating the establishment of a "R&D + clinical + manufacturing + application" whole industry chain policy. The support system will continue to improve the spatial layout of the "1+5+X" biomedicine industry.

Jiangsu Province recently introduced 30 measures to promote the high-quality development of the biomedical industry. A document published on the official website of the Jiangsu Provincial Government on September 26 stated that by 2024, the basic capabilities of the province's biomedical industry and the modernization level of the industrial chain will continue to improve, and the scale of industrial development will maintain a leading position in the country. Data show that the output value of the biomedical industry in Jiangsu Province will account for about one-sixth of the country in 2020, and the output value in the first half of 2021 will increase by 16.4% year-on-year.

In addition, a document issued by the General Office of the Nanjing Municipal Government on September 23 proposed that it will focus on building four functional areas: "Biotechnology Innovation Center, Biomedical Industry Highland, Biomanufacturing Application Platform, and Bio-agricultural Transformation Base", and strive to achieve bioeconomy in 2023. The output value reached 400 billion yuan, achieving the goal of doubling; Sichuan Province recently also proposed that by 2025, the province's biological economy will exceed 1.5 trillion yuan. Changsha City also proposed that by the end of the "14th Five-Year Plan", the total output value (revenue) of Changsha's biomedicine (including gene technology) industry will reach 250 billion yuan, and there will be about 30 listed companies.

At the same time, the role of capital markets in supporting and promoting biomedicine, a strategic emerging industry, has become increasingly prominent, and more and more domestic innovative pharmaceutical companies have landed in A-shares and Hong Kong stocks. Sha Yan, general manager of the Shenzhen Stock Exchange, said at the 6th China Pharmaceutical Innovation and Investment Conference that my country’s biomedical industry is transforming towards independent R&D innovation. Life and health is a typical knowledge-intensive and capital-intensive frontier field. The market fully converges all kinds of innovative element resources, and in this process it is indispensable and promising.

Innovative drugs "authorized introduction" model gets hot

As the medical reform continues to deepen, the policy-level attitude to encourage medical innovation has become increasingly clear. Especially since the second half of this year, the Drug Evaluation Center of the State Food and Drug Administration has released stronger signals of support for innovation on the "Clinical Value-Oriented Guidelines for Clinical Research and Development of Anti-tumor Drugs", which has further promoted the industry’s shift from follow-up Innovation is upgraded to hard-core innovation. In this context, listed pharmaceutical companies have recently introduced new drugs frequently, enriched their product pipelines through the license in (authorized introduction) model, and enhanced their innovation capabilities.

On September 28, Innovent announced that it has reached a strategic cooperation with UNION Therapeutics to introduce the next-generation PDE4 inhibitor orismilast for the treatment of inflammatory skin diseases. Innovent will obtain the exclusive research, development and commercialization of the inhibitor in China Equity, UNION will receive a down payment of 20 million U.S. dollars and is entitled to a cumulative milestone payment of no more than 247 million U.S. dollars, as well as royalties for the annual net sales of orismilast in China. Since mid-September, Haisco, Genting Xinyao, Saisheng Pharmaceutical, etc. have introduced a variety of innovative drugs, and the leading innovative drug company Hengrui Pharmaceuticals has also begun to introduce new drugs from the outside.

According to the statistics of Minai.com, since 2021, there have been more than 90 domestic innovative drug license in projects, of which more than 30 transactions exceeded 100 million U.S. dollars, and 14 exceeded 300 million U.S. dollars.

However, regulators and the market are cautious about the license in model. On September 18, the Shanghai Stock Exchange decided to terminate the review of Haihe Pharmaceutical’s initial public offering and listing on the Science and Technology Innovation Board. The Science and Technology Innovation Board’s Listing Committee considered that, considering that the issuer’s core products that have carried out Phase II or higher clinical trials were all derived from authorized introduction or cooperative research and development, the issuer continued to entrust partners to participate in outsourcing R&D services for core products during the reporting period. The issuer failed to accurately disclose whether it has independently made substantial improvements to the core products authorized to introduce or co-developed, and whether it is technically dependent on the partner.

From the perspective of the industry, this means that the capital market will focus on cultivating a group of truly innovative pharmaceutical companies. Although the license in model is a convenient way to expand the product pipeline, pharmaceutical companies cannot rely on this model for a long time. Only companies that continue to develop and innovate will be recognized by the capital market.